capitalisation

Traductions

• anglais

  Auteur : Institut canadien des évaluateurs, 1975

  Définition

  The process of converting into present value (or obtaining the present worth of) a series fo anticipated future periodic installments of net income. In real estate appraising, it usually takes the form of discounting.

  Note :

  The accountant sometimes uses the work "capitalization" to mean, in effect, what appraisers call an addition to capital. "In the broadest sense, the capital of a business is measured by the total of the resources available to carry on its operations. Capital so defined comprehends a creditor interest as well as the entire proprierary equity. Excluding the liabilities, corporate capital consists of the amount of funds specifically contributed by the stockholders plus the undistributed profits". (From Accountants Handbook, third edition). Acquisitions of assets are capitalized when their value extends beyond the current accounting period which is usually twelve months wither on the calendar basis or on the fiscal year basis. Assets are classified as current, fixed, and ogtentimes, intangible assets. Current asets are valued at cost or market, whichever is lower. Fixed assets are valued at cost less depreciation. The accepted theory by the accounting profession is that the cost of these assets should be distributed over their useful life. Intangible assets are usually valued by capitalizing earning power. In business this value is called goodwill, and, while it is not considered good practice to carry the value on the books unless purchased directly as such, it is necessary in determining the real value of a going business and is necessary in the sale or purchase of a business. After the profits habe been normalized, there is deducted from the average net profit a fair rate of return on the tangible assets. The balance is then capitalized at an agreed upon percentage.

  Terme :

  1. capitalization